Utilities commission calls for PNE, Resident Power hearing

By DAVE SOLOMONNew Hampshire Union Leader

CONCORD - Fallout from Power New England's demise as a competitive electricity supplier continued on Wednesday, as the Public Utilities Commission staff called for an immediate hearing to determine if PNE and its broker, Resident Power, should face penalties and loss of operating permits for failing to follow several rules as PNE hit a money crunch and attempted to sell its customers to another company.

The regulatory agency wants to know why PNE failed to maintain the energy supply required to meet its customer demand, and failed to inform those customers in the required 30 days of their transfer to another company. Regulators also want to clear up the relationship between the two companies, in which a father and son are involved, writing that "business and ownership relationships between the two entities are so intertwined that attempting to investigate the companies separately would result in an unnecessarily complicated process."

Gus Fromuth is managing director of Manchester-based PNE Electric and on the board of directors of Resident Power, whose managing director is his son, Bart Fromuh. Resident Power was the broker that marketed PNE power to 8,500 New Hampshire households. Fromuth, an attorney, acts as in-house counsel for PNE.

"It is important to note," the PUC staff writes, "that most if not all of the 8,500 customers of PNE became customers of PNE through Resident Power's role as an aggregator of customer accounts," and that "Resident Power failed to disclose this affiliation to its customers as is required."

From Feb. 20 to Feb. 23, as news of the PNE problems broke, the Consumer Affairs Division in the PUC fielded 83 phone calls from confused PNE customers, who received notices from PNE and Resident Power that were "confusing as to what options were available to them as customers."

The agency staff is calling for a hearing as soon as possible, at which PNE and Resident Power would be required to produce organizational charts, ownership records, financial records, financial projections and copies of various communications, among other things.

The staff also suggests that PNE has been attempting to enroll a large commercial customer, despite its suspension of operations, which Bart Fromuth denies. "Our records indicate no customer was enrolled with PNE since Feb. 1," he said.

Regarding the rules violations cited by the PUC staff, he said, "Those rules apply only if there is a long-term, 30-day strategy at least to cease selling power. That rule is impossible to comply with for a company going through significant cash constraints. We're hopeful that we'll be able to set the record straight and the request (for a hearing) will be rescinded."